Could Apple Upend Streaming Media by Competing with Spotify and Netflix?

For awhile now, there has been talk of Apple creating a Pandora or Spotify competitor. Pandora is the online radio service that allows users to create automated music stations based on particular artists, songs, or styles of music. Spotify is another similar service that not only allows you to make automatically generated stations, but also create custom playlists of particular songs you like. Google recently announced at their developers’ conference, Google I/O, that they were bringing such a service called “Google Play Music All Access“. For $9.99 a month users will be able to stream music from the entire Google Music library, as well as their own songs, in genre specific station formats, as well as adding specific songs they like to their own stations.

Speculation has been rampant that Apple will do something similar with iTunes. Not long ago they introduced iTunes Match as a competitor to Google Music and Amazon Cloud Player. Both Amazon’s and Google’s solutions allow you to upload your audio library to their servers with your account and listen to it anywhere you want through the web for free, before hitting the song limit that is. Apple solution, however, costs $25 a year, and will instead scan your iTunes library and add high quality versions of the songs in your library from their servers, and only upload those files which it does not recognize or which iTunes does not have in its store. However, these are not the same as they use music you have already purchased, rather than the entire library of the iTunes, Amazon, or Google Play Music stores.

If Apple is planning on offering a streaming subscription service, they are most likely negotiating royalty fees and licensing rights with the record companies. And if they do announce this at their upcoming WWDC (World Wide Developer Conference), then some might call this a “me-too” move, even if speculation has gone on longer with Apple than Google on this move.

Admittedly this move makes sense, as Apple has probably the largest digital media library of all the online stores. And we know that people are more than happy to stream music and pay for it, as indicated by Spotify’s 6 million paying subscribers out of the 24 million active users (in other words, 1 out of every 4 Spotify users pay for the service). But what if Apple decided to do something more? What if they not only offered a streaming music service, but also a Netflix competitor.

As mentioned before, Apple’s media library is by far the largest and most valued of the digital media stores, generating $4.1 billion in revenue for the company. If Apple were to offer customers a streaming music and video service for $9.99 or so, then Apple could potentially 1-up Google and now compete more directly with Amazon, Netflix, and Hulu. Not only would they have the brand recognition of iTunes, but they would already have a potentially large user base and network already in place. Anyone who has a copy of iTunes, which already runs on every Mac and iOS device, as well as on Windows, could already have access to the iTunes Streaming network, which one could call iTunes Now or iTunes Streaming.

Big media, meaning the TV, movie, and music industries, could also benefit from this. Apple proved that if you give people access to buy digital media at a fair price, piracy could be reduced. Netflix has also shown this to be true as places with Netflix have decreased rates of online piracy. Furthermore, they would be more likely to already have licensing deals ready with the movie and TV industry, as well as the music industry, and potentially be more friendly than competing services like Netflix. Finally, there is the potential for continued consumption of the same series. Apple could immediately offer the viewer not only the option to stream another episode or view content of similar type, as other online streaming services do, but could also to offer the user the ability to directly buy the content or a season of content straight from iTunes. This means the content companies would not only get a royalty fee from viewing, but from direct purchasing of the content as well.

Realistically, Apple would not likely be able to stream all of it the content because some companies would want to maintain control of certain programs. Case in point, HBO’s “Game of Thrones,” which is only streamable through HBO’s own HBO Go, but on no other competing services. People can only purchase and download episodes from iTunes. Certainly HBO would not be the only service limiting this kind of access. This brings up the point that Apple already has its renting service, but has been limited to movies since 2011, usually about $4.99 for an HD movie and $3.99 for a standard definition movie. Apple stated previously that people preffered purchasing shows through iTunes rather than rent individual episodes for 99 cents. This only helps the point though that it will be successful by offering a flat monthly or yearly rate for streaming movies, shows, and music from the iTunes Store directly.

So far, there has not been much indication to this idea, besides the streaming music option. But it does not mean that it cannot happen. Apple has pulled surprises before; this could just be another one.

Published by Stuart French

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